2013 and 2014 marked bumper years for the tire industry. On the one
hand, the raw material prices in the upstream remained falling; on the
other hand, both the European and American markets resuscitated in a
moderate manner, leading to an increasing demand from downstream. Take
natural rubber, as a kind of raw material in the upstream, for example,
the prices continued slipping, down from USD4,616/ton in 2011Q4 to
USD2,574/ton in 2013Q4 in the international market. As the same case in
Chinese market, the natural rubber price slumped from RMB21, 500/ton in
Oct.2013 to RMB14, 380/ton by Mar.2013, a sharp drop of 33%. It is
estimated that the price of natural rubber will maintain at a low level
or even will see a slight decline in the second half of 2014.

In 2013, the tire demand appeared to be robust due to the steady
recovery of European and American Economy. In 2013, on the global basis,
the OE tire and RT (Replacement) tire demand for PLT (Passenger and
Light Truck) use both grew by 3%, for CV (Commercial Vehicle) use
increased by 6% and 5%, separately.

According to the statistics conducted by China
Rubber Industry Association Tire Branch, the profit of 46 industrial
players surveyed rose by 12.3% to a record high of RMB10.07 billion.
China exports a matter of one third of its tire products, and mostly to
the US. In 2013, the US imported 51.2 million tires from China, up
57.5%, the record growth in the past 7 years. In 2012, the import
volume, for the US, grew by 25% to 32.5 million units; in 2011, the
figure posted 26 million. During 2013, the import volume of tires for
passenger cars, for America, beat a new peak, up by 13.6% year-on-year
to 143.7 million. The growth mainly attributed to the import business
from following three regions: Chinese mainland (a sharp year-on-year
rise of 55.8%), Indonesia (a year-on-year growth of 16.7%) and Taiwan (a
year-on-year jump of 22.7%).